| There are over 9000 publicly traded stocks. No | | | | examine more closely, so if you don't have a lot |
| one can possibly know even half of these or | | | | of time to spend, 30 or less is about all you can |
| have time to look at each one. A stock screen is | | | | handle on a weekend. |
| simply a filtering method to allow an investor to | | | | I like to run screens for several important criteria |
| use software to scan all the available public stocks | | | | at once. I don't want any low-priced, low-cap, or |
| and find those with certain criteria. Probably the | | | | thinly traded stocks, meaning low daily volume; I |
| best examples of searches are high dividend | | | | also like to avoid companies with very much debt |
| stocks, stocks that are cheap relative to earnings, | | | | at all, above 10% of equity is too much for me. |
| growth, or book value, stocks that are up the | | | | Once I add these four criteria in my screen, I'm |
| most over a year, and stocks with no debt. You | | | | suddenly left with only about 600-750 companies |
| can also search for stocks to short or avoid. | | | | out of the original database of 9500 or so, and |
| When you start sifting stocks, a good screener | | | | these are usually the only stocks I would consider |
| will show you the number of companies that | | | | holding long. |
| meet each filter that you invoke. Let's say you | | | | From this subset of all stocks, I want to pick |
| ask for stocks above $5.00 per share, my | | | | those best for current investment, which will |
| screener tells me that I now have roughly 5000 | | | | involve looking at more criteria, such as recent |
| that match this. I then add market capitalizations | | | | performance, revenue growth, earnings growth, |
| above 200 million; I find that 4000 meet this filter, | | | | and more fundamentals factors. When I get my |
| and when added to the first one, I now have just | | | | final list of say, 25 stocks, I then look at stock |
| 2500 candidates. In more risky markets, you | | | | charts, or technical analysis, to find those best |
| don't want to own the smallest companies, as the | | | | suited for immediate investment or trading. |
| risk of bankruptcy for these is too great. | | | | Whatever your investment strategy or bias, a |
| A good screener will also allow you to only return | | | | screener will let you apply your own selection |
| stocks from an index, such as the S&P500, | | | | criteria and values to meet. The big sites all |
| or even a sector, such as energy or financials. | | | | provide screeners: Yahoo has a basic one, |
| Some also add relative performance criteria such | | | | Reuters has an even better one. Usually your |
| as top 10% in its industry or top 20% of the | | | | own broker will have a good one as well, |
| entire market. | | | | especially for active traders. Simply find one you |
| When you run screens, you need to get the | | | | like and learn how to use it well, you will be |
| number of eventual matches down to a | | | | screening stocks like a pro, and you may be |
| reasonable number, say less than 100. Your final | | | | saved from investing in the wrong companies. |
| screen will be a list of stocks you want to | | | | |
